Harless Tax Blog
Source from irs.gov
Retirees should do a Paycheck Checkup to make sure they are paying enough tax during the year by using the Withholding Calculator, available on IRS.gov. The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including retirees.
Because of this law change, retirees who receive a monthly pension or annuity check may need to raise or lower the amount of tax they pay in during the year. The easiest way to do that is to use the Withholding Calculator or read Publication 505, Tax Withholding and Estimated Tax. Though primarily designed for employees who receive wages, this online tool can also help those who receive pension or annuity payments on a regular schedule, usually monthly or quarterly. See More
This spring, don't just stuff your completed tax return into a drawer. Go through it for savings opportunities you can seize right now.
More than 94 million tax returns have been filed as of March 30, still a long way from the more than 155 million returns the IRS expects to receive this year.
If you've already turned in your paperwork and received a refund — or a tax bill — take a moment to comb through your return.
This is especially important because your 2017 return marks the last time you'll be filing under the old tax regime. See More
Among employer-sponsored retirement plans, 401(k)s have become the standard. Some prospective employees assume that a job will come with a 401(k). Therefore, offering a 401(k) at your company may help you hire desired workers, and help you retain valued employees.
That said, there can be drawbacks to sponsoring a traditional 401(k). Such plans require annual testing to ensure that a 401(k) does not discriminate in favor of highly compensated employees, including owner-employees. Failing such a test may limit the amount that company principals and certain others may contribute to the plan, resulting in a reduced tax-deferred retirement fund for key individuals.
One solution is to offer a safe harbor 401(k) for your small business. A study released in late 2016 by Employee Fiduciary, a 401(k) provider for small businesses, found that 68% of the small firms responding to the survey use a safe harbor 401(k) plan design to avoid annual nondiscrimination testing. A safe harbor 401(k) allows sponsoring companies to avoid these tests, providing the business makes certain contributions to employees’ accounts. The mandatory employer contributions are always 100% vested. See More
Original Article by Tom Anderson.
Your chance of a tax audit is low. Only about 0.7 percent of tax returns receive an audit from the IRS.
Yet before you take your chances with some dodgy deduction, know this: That figure jumps to 9.5 percent if you make $1 million or more annually.
"The more money you have, the more of a chance you have of being audited," said Dave Du Val, chief consumer advocacy officer at TaxAudit.com, an audit defense company that handles more than 25,000 audits per year. See More
Source CNBC. Read Original Article
Putting your RMD to work Make the most of your required minimum distribution Thursday, 19 Nov 2015 | 7:00 AM ET | 01:08 The clock is running out on retirees who haven't taken enough from their retirement accounts this year.
IRS rules on the so-called required minimum distributions generally kick in once you reach age 70½. For 401(k) plans and other defined contribution plans, it's either when you turn 70½. or you retire, whichever is later. If you've inherited an IRA, you might also be subject to RMDs, even if your own retirement is years away.
How much you need to take is usually based on the account balance at the end of the previous year, and your life expectancy based on your age. Fail to withdraw enough, and there's a 50 percent penalty on the shortfall. See More
A majority of 401(k) plans offer only one source of investment advice to participants. However, it appears that plan sponsors are starting to reconsider this approach. Some sponsors are adding new forms of advice: 27% are likely to start offering access to an adviser and 25% are likely to give participants access to one-on-one advice from a third party. See More
Just a quick reminder that the deadline for setting up new 401(K) Plans with the Safe Harbor provision is quickly approaching. All new Safe Harbor plans for 2015 must be in place by October 1, 2015.
The Safe Harbor 401 (K) plan is one of the most popular retirement plans that business can have. Safe Harbor 401 (K) plan makes it easy for small and entrepreneurial business owners to maximize contributions to their own accounts while keeping employee costs manageable. You have until October 1 to establish a new Safe Harbor 401 Plan for calendar year 2015.
The Safe Harbor Plan 401 (K) plan allows owners to:
- Contribute the maximum annual deferral amount to their own 401 (K) plan ($18,000 or $24,000 if age 50+)
- Receive additional Safe Harbor contributions (they are an employee too!)
- Reduce the challenges associated with the 401 (K) non-discriminating testing
The Safe Harbor 401 (K) Plan makes contributions in one of the following two basic formulas or numerous variations:
- Non-Elective - Contribute 3% of compensation to all eligible employees
- Basic Match - Match 100% of the first 3% plus 50% of the next 2% of compensation.